NATURAL RESOURCES IN UGANDA - ENERGY AND MINERALS

1. NATURAL RESOURCES IN UGANDA - ENERGY AND MINERALS UK-UGANDA BUSINESS FORUM 6-7th May 2014, Lancaster House London Ministerial Address By Eng. Irene Muloni (MP) Minister of Energy and Mineral Development, Uganda

2. INTRODUCTION • Uganda is well endowed with enormous natural resources such as Minerals, hydro, geothermal, petroleum resources, wind, solar thermal yet only a small fraction of this potential has been developed. • Uganda’s wealth of minerals includes among others Gold, Copper, Zinc, Nickel, Chromite, Tin, Columbite-Tantalite, Tungsten, Limestone, Clays, Vermiculite, Uranium and Dimensional stones.

3. Mineral Potential of Uganda

4. INTRODUCTION CONT’D • In the energy sector there is significant power potential of over 5,300 MW from renewable energy sources which is sufficient to step up electricity supply to current and anticipated mega industries to drive the economy steadily in the medium term. • In the medium and long-term additional power will come from oil and gas as well as uranium resources.

5. INTRODUCTION CONT’D • The development and sustainable management of these resources has placed Uganda on a steady path to economic transformation and is therefore an emerging market for investment. • It has attracted the highest foreign direct investment (FDI) in 2011 and 2012 in the East African Region with most of the funds going into the.

6. POLICY, LEGAL, REGULATORY AND INSTITUTIONAL FRAMEWORK ENERGY SECTOR The Energy Policy for Uganda 2002 Policy Goal To meet the energy needs of Uganda’s population for social and economic development in an environmentally sustainable manner; and

7. POLICY OBJECTIVES: • To establish the availability, potential and demand of the various energy resources in the country • To increase access to modern affordable and reliable energy services as a contribution to poverty eradication • To improve energy governance and administration • To stimulate economic development • To manage energy-related environmental impacts

8. It aims to provide a framework to increase in significant proportions the contribution of renewable energy in the energy mix. RENEWABLE ENERGY POLICY FOR UGANDA 2007

9. Strategies Being Pursued • Feed-in tariffs to have been established to create a predictable business environment.   • A Draft Power Purchase Agreement for renewable energy projects of up to 20 MW is in place to reduce transaction costs. • Tax exemption for renewable energy investments is in place. • The Uganda Energy Credit Capitalisation Company (UECCC), a financial institution wholly owned by GoU, has been established to provide support in form of credit enhancement instruments to local financial institutions.

10. LEGAL FRAMEWORK The Electricity Act, 1999: The salient features of the Act are to provide the enabling legislation for: • Liberalising the electricity industry; • Unbundling of the Uganda Electricity Board into three entities namely generation, transmission and distribution; • The establishment of Electricity Regulatory Authority (the “ERA”) to regulate the sector;

11. THE NATIONAL OIL AND GAS POLICY POLICY OBJECTIVES 1 Efficient Licensing 2 Establishment & Management of Resource 10 Stakeholder Relationships 3 Efficient Production 9 Environment Conservation THE NATIONAL OIL AND GAS POLICY (2008) 4 Valuable Utilization of Resource 8 Development of National Expertise 7 National Participation 5 Promotion of Transport & Storage 6 Collection of right revenue

12. Oil and Gas Cont’d • Government has updated the country’s legislation to cater for the new developments and the dynamic nature of the oil and gas industry. The Petroleum (Exploration, Development and Production) Act 2013 and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act 2013 were enacted became effective in 2013.

13. Oil and Gas Cont’d • Government is in the process of establishing new institutions in line with the new legislation and these will include a National Oil Company to take care of the commercial interests of Government and a Petroleum Authority of Uganda that will handle the regulatory aspects of the industry.

14. Minerals Sector I. THE POLICY FRAMEWORK A. The Mineral Policy was published in 2001 • B. The Policy goal • To develop the mineral sector, for it to contribute significantly to sustainable national economic and social growth by creating gainful employment and providing alternative source of income particularly for the rural population in Uganda.

15. POLICY OBJECTIVES ARE AS FOLLOWS: • Tostimulateinvestmentbypromotingprivatesector participation. • Toensurethatmineralwealthsupportsnational economicandsocialdevelopment. • Toregularizeandimproveartisanalandsmall-scale mining. • Tominimiseandmitigatetheadversesocialand environmentalimpactsof mineralexploitation. • Toremoverestrictivepracticesonwomenparticipation andprotectchildrenagainstmininghazards. • Todevelopandstrengthenlocalcapacityfor mineral • Addvalueto mineraloresandincreasemineraltrade.

16. The Mining Act 2003 and Mining Regulations 2004 • It provides for the legal framework and administration of the Mineral Sector. • Uganda’s Mineral Policy provides for conducive, stable, predictable, legal and fiscal environments to attract new investment in exploration and mining based on private sector participation in a socially and environmentally friendly manner.

17. STATUS AND ARCHIEVEMENTS TO DATE Energy Sector The Energy Investment Fund • The Fund was established to enable government to speed up investments in hydro power projects and the associated infrastructure. • Money from the treasury is put into the fund annually.

18. Karuma hydro power plant 600MW • To ensure adequate supply of power, Government is now developing the Karuma hydro power plant 600MW as a public project • Thecontractor, for the Engineering, Procurement, Construction (EPC) of the Project and the Transmission Line is Sino hydro Corporation Limited in August 2013. • Construction is in progress and the Project is to be completed in 60 months. • The funding is by the Exim Bank of China and GOU, under a bilateral arrangement.

19. 183 MW Isimba Hydroelectric Power Project • The contractor for the Engineering, Procurement, Construction (EPC) of the hydropower project and the Transmission Line was awarded is China International Water & Electric Corporation (CWE • The Contractor is in the process of mobilizing man power and construction equipment. • The project is expected to be completed within 36 months. • The funding is by the Exim Bank of China and GOU, under a bilateral arrangement.

20. 600 MW Ayago Hydropower Project • A Memorandum of Understanding between the Government of Uganda and China Gezhouba Group Company (CGGC) was signed to undertake the development of Ayago hydropower project starting with completion of the feasibility studies. • Construction will commence next year as soon as the studies are completed.

21. Other Projects to be Developed with the Private sector • 80 MW from Cogeneration using bagasse • 200 MW Power generation from Geothermal. • 50 MW Power generation from Solar thermal • 50 MW Power generation from Solar PVs • 150MW Thermal Power Plants using Uganda’s oil resources. • 30 MW power plant from Peat • 30 MW Power plant from Municipal waste • Development of Orianga (400MW) and Kiba 300 MW Hydro Power Plants as Public-Private Partnership (PPP) Projects. • Over 150 MW from small hydros

22. Transmission Projects in the Medium Term • In order to increase access to Electricity, Government has planned to undertake the construction of several transmission lines to evacuate power from the generation plants. • These include; 264 km of 400KV, 396km of 220KV and over 1500km of 132KV. Along with these transmission lines will be associated infrastructure for the sub-stations.

23. Oil and Gas Sector • Significant progress has been made in exploration and appraisal of Uganda’s petroleum resources over the last three decades. • The first commercial discovery of oil in Uganda was made in 2006. Since then, twenty one (21) oil and/or gas discoveries have been made.

24. Oil and Gas Sector cont’d • It is estimated that the country’s in place volume of oil resources to-date is three and half (3.5) billion barrels of oil equivalent with a possibility of recovering between 1.2 billion and 1.7 billion barrels of oil equivalent. • Although some gas reserves, estimated at 100 billion cubic feet have been discovered, Uganda’s AlbertineGraben is majorly an oil province

25. Oil and Gas Sector cont’d • Government has issued one production license over the Kingfisher discovery and is reviewing production license applications for nine other discoveries. • Eight discoveries are at field appraisal stage and four sub-commercial discoveries were relinquished to Government and will be available during future licensing rounds.

26. Oil and Gas Sector cont’d • All this has been achieved in less than 40% of the AlbertineGraben, which is the most prospective area for petroleum exploration in Uganda. • These resources are therefore expected to increase with more exploration and appraisal efforts being undertaken. • We are now progressing towards development and production phases in some of the areas that are licensed.

27. Oil and Gas Sector cont’d • Over US$ 2.5 billion has been invested in the acquisition and processing of seismic data and drilling of wells by the oil companies licensed in the country. • This investment has been significant in taking the sector forward and is expected to grow exponentially as the country enters the development and subsequently the production and refining phases. • Government undertook studies for both refinery development and transport pipelines.

28. Mineral Sector • Since 2001, the Government of Uganda embarked on strengthening the capacity of the Department of Geological Survey and Mines so as to address a number of sectoral constraints and enable Uganda’s mineral sector to be attractive to investment. • In summary, the following achievements have been realized.

29. Mineral Sector cont’d • Acquisition of adequate Airborne Geophysical Data covering 80% of the country; • Mining Cadastre and Registry System (MC&RS) to enhance transparency in licensing was established. • A web based portal on www.flexicadastre.com/uganda to get access to mineral rights information on a GIS interface was set up;

30. Mineral Sector cont’d • A Modern Documentation System hosting a website www.uganda-mining.go.ug has been put in place; • Geological Mineral Information System (GMIS) to host geological, environmental, seismological and laboratory data is in place; • A trained Artisanal and Small Scale Miners (ASMs) resulting into improvement of their livelihoods and reducing environmental impacts in mining areas;

31. OPPORTUNITIES FOR INVESTMENT Energy Sector Opportunities for investment include; • Participation in Public-Private Partnerships for developing the large and small hydro plants to meet the growing demand of power. • Development of Privately owned Thermal projects. • Contribution to equity in financing of power projects

32. OPPORTUNITIES FOR INVESTMENT • Participation in the Engineering, Procurement, and Construction (EPC) of the planned projects. • Suppliers of equipment as we upgrade and expand our National Transmission network. • Participation in the development and promotion of the different renewable energy technologies such as small hydros, geothermal, solar water heaters, solar driers, solar cookers, etc

33. The markets have been liberalized principally through reducing state interventions • The Uganda Investment Authority provides information to investors and facilitates them to obtain permits, licenses and other requisite information; • The country is a signatory to the Multilateral International Guarantee Agency (MIGA) which guarantees protection of the; and • Under tax provisions, duty on mining equipment is zero-rated.

34. INVESTMENT OPPORTUNITIES • The government of Uganda recognises petroleum and minerals as non-renewable resource and therefore have to be managed sustainably as guided by the market forces for national economic and social growth. • The national economic development priorities are based on the following major economic reforms:

35. INVESTMENT OPPORTUNITIES Upstream • Speculative Geophysical surveys. To be undertaken in the Albertine Graben, and basins outside the Graben prior to licensing rounds to provide good quality and dense coverage data. • Acquisition of exploration acreage based on public competitive mechanism. • Joint Ventures and farm-in arrangements with existing licences. • Environmental services. These include waste management and treatment. • Construction of heated crude oil pipelines to refinery • Service provision and contracts in the fields of Engineering, Procurement & Construction, Capacity and Skills Development • Logistical services, • Hospitality services • Construction and Fabrication, • Medical, hotel, Leisure and training facilities

36. INVESTMENT OPPORTUNITIES Midstream • Development of the refinery; FEED and EPC. • Development of attendant infrastructure (pipelines & storage); Crude to the Refinery, Crude export & Refined product to distribution centers. • Services during refinery, Crude export and product pipeline development; Civil works, electrical, welding, etc. • Utility systems for the refinery. • Waste management facilities to handle refinery waste. • Refinery related petrochemical industry like LPG plants and bottling. • Capacity and Skills Development • Development of an Airport near the Albertine Graben to support development of the oil fields and the refinery.

37. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR • Iron ore • 200 million tons, proven reserve and another 88 million tons and 45 million tons of magnetite reserve occur at Sukulu and Bukusu complexes respectively. • Investment: Feasibility studies to process Ugandan’s iron ore using methane gas and coal should be carried out. This would necessitate develop a pipeline to transport gas, develop thermal plant to generate power (1000MW) using gas, set up iron ore smelting plants and develop railway network. Known Iron ore zones are marked by brown lines

38. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR CONT’D • Rare Earth Elements (REE), potential are: • Carbonatite centres in Eastern Uganda (Sukulu, Butiriku, Bukusu, Napak) with resource of73.6 million tonnes and grade of 0.32% Lanthanum Oxide (La2O5) at Sukulu. • Makuutu- Buwaaya area, Eastern Uganda, in Aluminous clays that are enriched in scandium, Gallium, Yttrium and REE in Makuutu area estimated at three (3) billion tonnes With grades of 23% REE and 27% Alumina. • Investment: Further evaluate the potential and established mechanized mining and processing of the resource.

39. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR CONT’D Precious Metals • Districts of: Bushenyi, Mbarara, Kabale, Kisoro, Rukungiri, Kanungu, Busia, Mubende, Moroto, Karamonja region Hoima, & many streams of West Nile • 5 million ounces of gold in Mubende District by Anglo Uganda Corporation, One (1) million ounces of gold estimated at Mashonga. • 500,000 ounces of gold estimated at Tiira, Busia and over 800,000 ounces estimated at Alupe in Busia. • 500,000ounces of gold at Kampono, (Ibanda); • 139,000 ounces and possible reserves • Investment is required to evaluate more potential establish mechanized mining and processing

40. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR CONT’D Uranium 10 potential uranium targets have been identified from airborne radiometric data • Kei and Midigo-Kaya Basin, Arua district. • Acha-Alo basin-Pakwach district. • Zipia, Bibia, Pekelle -Ayugi Basin-Adjumani • Naam-Okora, Ogli and Wol (Pager-Agago-Ogel Basin)-Kitgum district. • Karongo-Waki Basin- Masindi • Bulyango, Kigozi-Kiizi Basin-Kabarole district. • Mpanga-Kahambu Basin Kyatwa (Ndale) -Mpaga Basin, Kyakutama- Basin-Kabarole district. • Rubindi, Kashongi -Nyabishekye Basin, Mirama Kababo Basin – Mbarara distrtict. • Kinyasano, Nyakibale, Kagamba, Ntugamo, Rubare, Gayaza, Kahirimbi- Mbarara district. • Mabale, Kagadi, Isunga, Pachwa, Kabwoya-Hoima district.

41. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR CONT’D Dimension stones • Marble occurs in Karamoja Region, granite, granite gneiss, amphibolites, dolerite, gabbro underlie the geology of Uganda. • Over 300 million tonnes of marble in Karamoja and thousands of millions of dimension stones outcrop all over Uganda • Investment: Need to develop dimension stone, aggregate, premix industry for booming building industry in the region.

42. INVESTMENT OPPORTUNITIES IN THE MINING SECTOR CONT’D. GEOTHERMAL ENERGY AS AN ALTERNATIVE SOURCE OF ELECTRICITY Location of geothermal resource areas

43. CONCLUSION • Most mining and mineral exploration projects attract JV partnerships between junior companies and transnational companies. • We warmly invite you, Ugandans in the diaspora, to invest in the numerous upstream and downstream opportunities available in the mineral sector • There are various incentives such as favourable legal & fiscal regimes, Political and Economic Stability across the country, externalisation of funds, unlimited access to technical information, among others.

44. Conclusion Cont’d • Government of Uganda will continues to putting in place a very competitive investment framework that enable both vertical and horizontal linkages • Uganda is richly endowed with natural resources Government intends to develop these resources for the benefit of all Ugandans, the region and the entire continent. • Finally, there are un-taped mineral resources in Uganda and I look forward to seeing you benefit from enormous investment opportunities in Uganda.

45. THANK YOU You are welcome to invest in Uganda - The Pearl of Africa